It is odd to think of Southwest as not being serious about business travel. After all, contrary to popular belief, it’s business travel that has always been Southwest’s bread and butter. Those frequent first flights in the Texas Triangle (Dallas-Houston-San Antonio) weren’t going to succeed on the then-anemic leisure travel demand. It was the business traveler looking for a deal (and free liquor) that brought success.

That original model has held for decades. That may sound good, but the problem is that Southwest has often stuck to its guns and refused to adapt quickly enough over time, if at all, to new realities. That has kept Southwest in a proverbial box that I and others would argue it could have busted out of with different priorities.

Though selling to business travelers has always been at the core of the business, selling to managed travel accounts has not. “Managed travel” in a nutshell is when a company uses a travel agency to handle its corporate travel policies, bookings, and reporting. These agencies have long preferred to handle bookings through the Global Distribution Systems (GDSs) which make it easy to compile everything in one system. That makes reporting and compliance much easier to manage.

Southwest, as most people know, has long held firm to its desire to sell everything direct. That’s fine for unmanaged travel, but it’s a real pain for people who manage travel. Tools have been built to overcome this issue, but it’s still not enough.

Southwest has timidly dipped its toes into the GDS waters, but the effort has been generally useless for those companies where price matters. For example, if I look up a flight from Los Angeles to Nashville in a couple days, I get this on Southwest.com:

But when I look in Sabre, that Wanna Get Away fare is non-existent. The lowest fare is the Anytime $592 fare. It’s not that all Wanna Get Away fares are excluded, but it’s hard to know when a lower fare will pop up. In other words, it’s impossible to rely upon the GDS today, so that defeats the purpose of participating in the GDS.

Even when booking in the GDS, Southwest doesn’t have full participation. Agents can’t see flight availability, and ticketing is handled in a roundabout way that’s different than with nearly every other airline. Southwest segments also can’t be put into the same reservation as other airline segments.

For its best customers, Southwest has created “direct connect” options which feed more fare content into large agent systems. But for smaller customers, agents have to rely on SWABIZ, the old booking system for corporates that recently got a refresh but still lacks basic functionality like the ability to book multi-city flights.

Southwest has long believed that it just didn’t need to play ball. It had become big, and it dominated in many mid-size markets. It could sell direct and still do just as well as if it sold through third parties. Selling through third parties costs money, so why bother? Well, to the surprise of very few outside Southwest, there are very good reasons.

Participating in the GDS makes the airline instantly more visible to corporates. That’s particularly helpful considering the airline has spread into more big markets where it doesn’t have a large share. (Remember Newark?) In those markets, agencies are less likely to go to Southwest.com (let alone SWABIZ).

But even in markets where it dominates, Southwest could still likely benefit from participating in the GDSs more fully. Costs to do so have come down, and the revenue benefits have proven to be large for legacy carriers. Southwest may not have an identical model as those airlines, but it’s long been clear there was benefit to be had.

So it was with great relief when I saw Southwest announce it was finally going to play the game properly. Along with a re-branding from Southwest Corporate Travel to Southwest Business, the airline will now fully participate in Galileo and Amadeus GDSs. Now, this doesn’t help me since I use Sabre, but I have to imagine that will follow eventually. This doesn’t sound like a strategic issue but rather an economic one.

This means agencies can search for and book Southwest in their GDSs just as they do other airlines… when this goes live in the back half of 2020. It will make multi-city bookings possible along with changes and cancellations. It makes Southwest far more attractive to those people actually responsible for booking a ton of travel.

What’s not clear is whether this will actually be full participation or not. On the website, Southwest says it will offer “Access to our everyday low Southwest fares through your channel of choice.” That mention of “everyday” makes me a little nervous. Not all sale fares will be included? It’s hard to know for sure. If it’s not all fares, then that’s frustrating. For consumers, I should also note that this doesn’t mean Southwest will participate in online travel agents like Priceline or Expedia. That isn’t part of the plan. The scope is narrow, but the benefits will add up.

Southwest says that for the back half of 2020 when this launches, it should contribute $10 to $20 million directly to the bottom line. That’s a drop in the bucket, but it’s also probably underestimating the true impact. I’m guessing that this math is what convinced Southwest it didn’t need to pursue this sooner.

It’s a relief to see Southwest finally come around to the reality that GDS participation is a good thing. Agents will be happy, and it should also make it easier for Southwest to expand into markets where it doesn’t have a dominant presence. Finally.

So… will Travelport and Sabre get a look in eventually? Hopefully so, there’s plenty of TMCs using those GDS’s. Either way, good to see Southwest linking up with technology that’s been in place for literally decades.

Southwest’s lack of GDS participation which results in a lack of abililty to compare fares and manage travel – is one of the major reasons why WN does not do well in legacy carrier hubs and strength markets, no matter how much WN says.

WN has never wanted consumers to be able to compare their fares to other airlines and yet most corporate travel managers need to know if their buying is the best price or not.

Lack of GDS participation also cost WN the ability to serve MEX and they will not succeed in any ethnic foreign market w/ significant non-US point of sale until they participate in GDS.

I wouldn’t hold your breath about WN participating in Sabre. You would think that they would fully participate in all 3 but there are costs to do so and having Amadeus host WN’s res system gives them a powerful reason to gain a market advantage on the GDS side.

I’d argue WN doesn’t do well in legacy hub markets because WN’s fares aren’t all that competitive. They’re living on a past reputation as the low fare leader but arguably that title belongs to Spirit these days. I cross shop WN with DL and more often than not when you truly compare R/T fares the WN flights cost more and require more layovers. Granted I work for a small company and we don’t use a corporate travel agency but adding Southwest fares to GDS might be eye opening in ways they didn’t intend.

So true. Rarely have I ever found WN to be cheaper than a legacy carrier. Maybe if you add in the cost of a bag, if you need a seat assignment, etc., the price goes to WN’s favor. But with status on UA (and knowing that I get that stuff for free along with the upgrade), WN’s always more expensive.

Candidly, until WN introduces advanced seat assignments (yes, I know, it’ll never happen), I think they’re going to continue to have trouble attracting more business travelers.

Here at BWI where WN has a nearly fortress hub that is the norm where they have no competition, although Spirit is growing rapidly. Even if you are not a fan of Spirit, their arrival usually means a fare reduction by other carriers. Case in point: BWI – BNA can easily run $900 RT. Now that Spirit will be flying that route, look for fares to come down substantially.

Agreed on fares. I almost never find WN to be competitive on fares these days (at least for the routes I fly), and the “free” checked bag does little for me. If anything, I’m a little biased against WN due to the lack of seat assignments and the more amateur / leisure mix of of travelers that WN flights attract.

However, it would take a LOT to get me to book Spirit… Between sub-daily frequency on many routes (better hope there are no irrops when you fly Spirit) and bone-crushing 28″ pitch, I will pay a substantial premium to avoid Spirit.

I think it just came to growth options for shareholder’s benefit. There wasn’t much left for WN to do to grow it’s business considering its constraints (single aircraft type, union contracts, no bag fees, etc.). Distribution will be very interesting to watch for WN, but if the OTA’s aren’t included then consumers won’t be able to price shop, which I suspect they are still super afraid of considering their high cost operation. When they see the positive revenue impact of GDS distribution, I’m curious to see the next steps they take.

The whole point of being off the OTAs is so consumers can’t price shop. WN’s fares are generally higher, pretty often once the checked bag fees of the other airlines are factored in. WN sells on its reputation for convenience (no fees) and good customer service and (so far) their customers go directly to them in enough numbers based on that reputation. But once the price comparison is displayed in front of them on an OTA or meta search engine, quite a lot of those customers (most people’s first inclination is price) may start to book away. And then WN will have to play the same “race to the bottom” game of unbundling the fares and adding in the ancillary fees.

I don’t know that I would agree with that sentiment. As someone who lives in MSP a Delta fortress hub I can tell you that frequently I find that WN is much cheaper than both DL and UA for my trips to a lot of places. I fly down to ATL and DEN regularly and with one checked back generally you can’t touch the WN price so long as your not booking like a day or two out. I routinely see fares about $99 each way to both and when you figure that I usually have a carry on and a checked bag any cost savings flying basic economy or regular economy with either of the other carriers goes right out the window. I will say that I do find NK to be somewhat competitive if you need to fly them. That is if your plans are never ever going to change and your willing to book well in advanced and know how much baggage you will need.

MSP – ATL is a connection on WN whereas DL has a direct….a lot of directs since it’s hub-to-hub. WN has directs MSP – DEN but so does everyone else and the route is relatively cheap due to competition. I’m MSP based and while I have status on DL that more than covers any fees that WN includes apples to apples I’d say 75% of the time DL wins either on price or schedule, i.e. connections.

Don’t get me wrong, WN gets a lot of my business but it’s usually for things like wanting to fly into HOU in lieu of IAH so I have a layover either way and it comes down to schedule.

There is so much about the airline industry I simply don’t know, much less, understand. And, Southwest certainly is a strange bird, but thank goodness they exist, else I fear consumers would be so lost and taken advantage of. I wonder if the de-regulators had a clue as to what de-regulation would bring forth.

I ask as a consumer, someone who believes there is more to choosing flights than simply taking the lowest fare, or the lowest total cost, or the fastest flight, but having some clue as to how airlines look at premium-class consumers vs. those in ecomomy-class. I get the impression that airlines offering two classes of service worry most about those buying premium. The ecomomy consumers-who cares–just so they don’t buy from a 1-class airline like WN, or decide to completely forego premium-class service.

Any publicly-available stats out there showing, by airline, perhaps by route, what percentage of revenues, costs, and profits come from/are paid for by class of service consumers? Would I expect to find the percentage break-downs the same for all of the4 2-class airlines, say UA, vs. DL vs. AA? If WN goes 2-class, what airline would it most likely want to replicate?

jaybru – That info can be extracted from DOT data. For domestic, premium cabin is still a small portion despite recent gains. I don’t have the time to sift through that, but DL is probably the furthest along in monetizing that cabin best.

I work for a large company. A few years ago, WN was added to our travel portal (Carson Wagonlit Travel) and is specified as a preferred carrier. I believe that the portal offers the same WGA and Anytime fares as are offered on WN’s web site, but curiously it does not offer senior fares (which could often save me hundreds of dollars on corporate travel).

(In response to many comments above – I book WN even if the price is higher due to their “no fees” policy. Admittedly, if I can get a legacy nonstop at a good price or on miles once my plans are firm, I frequently switch.)

…how does it take a year to set up a gds connection for an airline hosted on Altea?

WN has the simplest pricing and ancillaries, should have some of the fastest and most robust APIs to shop, book and service their content. They can’t spare a couple million in capex every year to build reliable systems? Next time you hear an airline talking about its tech capabilities, think of these bozos.

forget about GDS, how about improving their own damn website where anyone semi airport agnostic has to perform repetitive search queries per airport combo ?? maybe someone can show me how, but so far i couldn’t figure out how to make it one single search on southwest.com when i wanna fly OAK to either LAX, BUR, ONT since I’m agnostic to all 3 (that’s just an example, the combination of LA Basin airports I’m agnostic to varies depending on where I’m headed to)

(yes i know they all pop-up as a choice but you must pick one per search.)

Maybe someone forgot to tell those stable geniuses in Dallas that there are tons of folks who are semi airport agnostic and a good chunk absolutely hate that interface they have out there ? It’s freaking 2019 and apparently co-terminus airport search is too much to ask.

I assume they *do* know to group airports together (e.g. typing in something like “BUR” will initiate a drop down suggesting the other LA-Basin airports, with a label on the drop-down like “LA Area Airports). But they don’t actually allow it in the search feature. I assume this is intentional.

Delta’s strength at both ends of that route make it really tough. Frequent business travelers in both Boston and Atlanta are probably Delta loyalists. This was always a given for Atlanta-based travelers, but it’s relatively new for those in Boston.

JetBlue and (especially) Spirit also give them heavy competition for leisure travelers.

Given the above, it makes sense that they can probably make more money on a route somewhere else with less intense competition.

I also think Southwest is doomed to weak performance in BOS, because their target flyer overlaps too much with JetBlue – both are targeting domestic flyers who want a nice/friendly experience in economy, and probably don’t fly enough to be chasing higher status tiers. JetBlue’s extensive network in BOS means that flyers are more likely to have experience/positive affinity with them, and pick them if they have a choice.

Southwest’s refusal to list on OTAs also makes it really hard for them to compete in a market where they aren’t the #1 or #2 player. If I’m searching for flights from BOS on an OTA and I see a direct JetBlue flight to where I want to go, I don’t really have a reason to go check southwest.com. Prices will probably be similar, and I already know my experiences with JetBlue have been positive.

I saw that and the dropped route that most surprised me was OKC-DAL. Really?! I thought that would be an old-school bread-and-butter short-hop route for SWA. Laughably, their spokesman said that traffic could still connect through Houston, turning a half-hour flight into three! ? My hypothesis is that SWA is maxed out with the 18 gates they’re allowed to have at Love Field, and now they are dropping less profitable uses of those gates for more profitable longer flights. I’m almost certain they would be keeping this route if they had the gates to spare. Cranky, any thoughts?

Tory – You’re right, it’s an old school bread and butter route… from when Southwest couldn’t fly beyond bordering states. It’s a really short drive and there’s not enough traffic to justify keeping it when the gates are constrained as they are.

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